When voter approval is required for new local government taxes

from: A former county commissioner
subject: PA 88 of 1913
body: Eric: I am a former county administrator and county commissioner from a Michigan county.

After my retirement from the board, the next Board of Commissioners “discovered” PA 88 was still on the books and levied a .5 mills property tax on the property owners of the county to support the local MSU Extention office and county economic development agency. I and several others protested that they could not levy such a tax without a vote of the people because it violated Headlee. That is, my belief is that because of Headlee, if a tax was not in place in Nov 78, you must have a vote to establish it.

The Board at the time, in 2010, sought and received a legal opinion from a local attorney who is on the board of economic development agency, that stated they had the authority to do this. In fact, it was pointed out, that Washtenaw County was already taxing under this authority.

I do not believe this is right because of Section 31, Art IX of the Constitution. Can you imagine the amount of money sucked from the private sector if every County in Michigan did this. I believe it was the spirit and intent of Headlee to prevent just such actions.

We, our group of opponents are looking for help fighting this. Can you help or steer us to someone who can?

Thanks so much for your time.

CRC’s Response

I’m afraid my response will not be helpful to your cause.

Although Michigan is a strong home rule state (Home rule cities, villages, and counties are assumed to possess a broad range of powers and do not require authorization from state law to engage in most activities. The courts are to assume general law governments (e.g., townships, most counties, school districts) have powers that are fairly implied.), state law requires the enactment of specific laws to authorize the levy of taxes by local governments. In some other states, local governments can design and levy taxes without action or authorization from their state governments.

The Michigan Constitution requires for many (but not all) types of taxes, in addition to the authorization in state law, that voters within the local jurisdiction must approve the levy of the taxes at the ballot box. Article IX, Section 31 of the Michigan Constitution (part of the Headlee Amendment of 1978) provides in relevant part,

“Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon.”

A key point here is that the language says that the tax must be authorized. It does not require that the tax was levied by the individual unit of government in 1978.

Local government taxes can be authorized in four ways. Those four ways can be sub-divided into two groups:

A. Those requiring voter approval:1. Charter millage. The charters of home rule cities, villages, and counties provide for the levy of property taxes and limit the rate at which the taxes can be levied. The home rule governments can work within those limits without going back to the voters every time, but voter approval is obtained when the residents approve adoption of the charter.

2. Charter township and extra voted millages. Charter townships can exceed the limits generally placed on general law townships, levying taxes at rates that cannot exceed ten (10) mills. Like home rule governments, the authorization to do so is obtained when residents of the townships vote to adopt charter township status. Other taxes may be levied only with voter approval. Extra voted millages can be levied for a wide range of activities and must be of limited duration.

It should be noted that these vote requirements extend to other types of taxes that were not authorized to be levied by individual local governments in 1978, including: local option income taxes, utility users excise taxes, and casino taxes for cities; and rental car and hotel room taxes for counties.

B. Those not requiring voter approval:3. Tax Allocation. General purpose governments are authorized to levy a limited number of mills for operations within certain tax limitations. Those limitations generally confine the number of mills to be divided among the different types of governments to 15 mills, but it can be raised to 18 mills with a county-wide vote.

4. Taxes that Pre-Dated Headlee. A number of taxes existed in state law to authorize the levy of taxes by different types of governments. The section of the Headlee Amendment cited above specifies that local governments are, “… prohibited from levying any tax not authorized by law or charter when this section is ratified …” These taxes were authorized by law when this section was ratified and therefore do not require voter approval to be levied.

For cities, these include:
A tax of up to 3 mills for garbage collection and disposal.
A tax of up to 1 mill for library operations.
A tax of up to 1 mill for senior services.

For counties, this includes Public Act 88 of 1913 for economic development purposes.

Referring to the point made above, you can see that taxes may have been authorized, but not levied, in 1978 1) if charter authority existed, 2) if taxes were allocated to a county or township, and 3) because the authority existed in state law for cities and counties to levy taxes for garbage collection, libraries, senior services, and economic development.

I have purposefully avoided going into too much detail in this explanation. If there are any details I can provide that would help to fill in holes or answer further questions, please do not hesitate to ask.

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Eric Lupher
Director of Local Affairs
Citizens Research Council of Michigan
734.542.8001elupher@crcmich.org